Report on Pay Talks-Beware of Choreography! January 16, 2013

I have appended below the IMPACT Report on Pay Talks to Branch Secretaries and the IMPACT Briefing on European Commission ‘draft leaked report’ on bailout progress. (Are other unions doing this?). The Briefing contains very useful and important factual material.

The threats to public service pay and pensions of existing staff are indeed very serious and must be strongly resisted.

However it is well to understand that there is considerable choreography in play between government and union leaders.

In my opinion it is wise to assume that the substance of the deal is already done with the officer board of the Public Services Committee of ICTU on which IMPACT, PSEU, SIPTU and INTO are represented.

The employers initial position is being made as threatening as possible including a threat to proceed with cuts unilaterally. This will facilitate union leaders in “selling” a very substantial retreat to members on the grounds that they are saving us from much worse. It is “the oldest trick in the book”.

Perhaps a hint of what is afoot is contained in the IMPACT report on the talks: “The unions said that the negotiation would have to make a clear distinction between temporary measures needed to address the current budgetary crisis and change that would remain in place beyond the crisis.”

Let us recall that the existing Public Service Agreement (aka Croke Park Deal) contains a provision that the previous public service pay cut would be restored gradually by using a proportion of savings under the agreement for this purpose. This has now been forgotten by union leaders to the extent that it does not feature in the list of demands (very weak!) put forward by the public service unions at the talks (see below).

Indeed after the successful one day public service strike in late 2009, PSC(ICTU) announced that the unions were entering talks to negotiate temporary changes.
Let us not be fooled twice by “temporary” measures.

Paddy Healy

IMPACT REPORT ON PAY TALKS

Negotiations on a possible extension to the Croke Park agreement
Summary of meeting between unions and management on 14th January 2013

Management position
Management said it would be implementing measures to further reduce the public service pay and pensions bill by €1billion, on top of the measures currently being implemented under the Croke Park agreement, and that it would seek to do this by agreement.
Management opened the meeting by outlining the issues it intended to table during the negotiations, which were grouped under three headings or ‘modules’: Productivity and efficiency measures; workforce reform; and further pay and pension bill measures. Management said it required different application of these measures in different sectors.

Productivity and efficiency measures
· Working hours, day and week
· Overtime/premia/twilight/supervision and substitution, etc
· Flexibility to deploy atypical working arrangements
· Management flexibility in the use and deployment of hours, rosters etc
· Extended opening hours of public offices

Union response
Union representatives opened by saying that the Croke Park agreement was still ‘live’ and did not expire until March 2014. The negotiation was aimed at seeking an extension to this agreement and its core protections must remain in place.
The unions said it was responding to management ‘without prejudice’ and that none of the measures or ‘modules’ outlined by management had been accepted. In general terms, the unions said any outcome of the talks would have to meet three criteria:
· Management would have to demonstrate that any proposal would make genuine and necessary savings.
· Any measures would have to be fair, which meant the outcome could not fall disproportionately on any group of staff, particularly those on low and middle incomes
· The outcome would have to pass the tests of ballots of union members.
The unions said that the negotiation would have to make a clear distinction between temporary measures needed to address the current budgetary crisis and change that would remain in place beyond the crisis. They then outlined measures that they required to be satisfactorily addressed in the negotiations. These included:
· An adjustment to pension levy by exempting more earnings
· Measures to ensure the elimination of the two-tier workforce
· The consolidation of relevant allowances
· Outsourcing policy and practice (including ‘section 38/39’ agency issues)
· Agency workers – costs and approach
· Redeployment policy and practice and the ‘hoarding’ of staff
· Casualisation, particularly in second level teaching
· The moratorium on filling promotion posts
· Jobs initiatives from Department of Social Protection
· Waste and duplication elimination measures
· Reduction in consultancy expenditure
· Incentivised career break and hours reductions
· The treatment of State agencies
· Outstanding third party recommendations.

The unions said they would also raise some other industrial relations issues in the course of the negotiations.
The negotiation adjourned until 2pm on Tuesday 15th January 2013.

Irish Independent report
Today’s Irish Independent reports that a ‘draft leaked report’ from the European Commission calls for pay cuts for hospital consultants and other (unidentified) staff, calls on the Government to “scrap plans for further redundancies” in the public service, and highlights a “significant and unexplained” public-private wage gap.
It also says “Substantial additional savings through efficiency gains cannot be made within the required timeframe without damaging patient care unless high salaries and the high price of other inputs are seriously addressed.”

Status of the report
This is a “draft leaked report.” So it is not necessarily the final view of the Commission, let alone the troika. It may or may not turn out to be accurate reflection of Commission views, but it would not be the first time that Irish media had wrongly reported that troika members were critical of Croke Park.
Troika representatives have repeatedly acknowledged the contribution of Croke Park to Ireland’s recovery and reputation and in their press conferences have declined frequent invitations (from journalists) to criticise the deal.

International pay comparisons
According to the IMF, Irish public service pay was 11.2% of GDP in 2011 (the last year for which figures were available). This compares to an OECD average of 11.1% for OECD countries who are members of the EU (or 10.8% of OECD overall). In other words, Irish public service pay is roughly in line with comparable EU countries as a percentage of GDP even before you deduct the so-called ‘pension levy’ (an average 7% deduction), which is not included in the figures.
If comparisons are made on the basis of GNP, Irish public service pay looks higher. But all our ‘troika’ and EU targets are based on GDP and there are other arguments against using GNP as the comparator.
The most recent and comprehensive data on international public sector labour costs comes from the OECD. Its 2011 report found only two groups – hospital consultants and top central government managers – are paid above international standards.
In general, the OECD report says that the cost of employing Irish public servants is about average when adjusted for price differences by measuring ‘relative purchasing power’. Relative purchasing power is routinely used in international comparisons of pay in the public and private sectors. The OECD says its figures capture the so-called ‘pension levy’ but not the pay cuts (also worth an average of about 7%) imposed in 2010. You can read more about the OECD report HERE.

Many Irish public servants are paid less than their German counterparts
Medical consultants are the only group mentioned in today’s Irish Independent report. It is possible that others are earmarked in the Commission’s ‘draft leaked report’, but it is hard to imagine the Independent choosing not to mention them if they were.
The figures above show that on average Irish public sector pay is in line with pay in comparable European countries. But research conducted for IMPACT shows that certain large groups of Irish public servants – including clerical officers and primary teachers – are paid less than their German counterparts at every stage of their careers, even though the cost of living is 17% higher here.

Addressing ‘high pay’ in the public service
Consultants’ pay is the focus of today’s Irish Independent report, which extrapolates to suggest that all health/public service pay is out of step with European norms – a common technique among critics of the agreement.
Unions say there is an issue about high pay – but this is an issue about high pay, not high pay in the public service. Recent Dáil answers show that 111,000 people earn over €100,000 a year in Ireland. But just 5,808 (about 6%) of these are public servants (about half are hospital consultants).

Unions say the issue of high pay is best tackled through tax not pay cuts as (1) this would address the real issue and (2) a focus on the public service alone (6% of the ‘problem’) would make relatively little impact on the budgetary figures.
· Less than 2% of public servants earn over €100,000 a year.
· 45% of public servants earn less than €40,000 a year.
· 68% of public servants earn less than €50,000 a year.
· 82% of public servants earn less than €60,000 a year.
· 90% of public servants earn less than €70,000 a year.

Public service pay has been cut

Since 2009, Irish public servants have endured pay cuts averaging 14% – with an additional 10% cut for ‘new entrants’ and promoted staff, who are now paid nearly a quarter less than in 2009. Many have also seen significant additional income cuts as overtime and premium payments have been abolished or amended under the Croke Park agreement. Public servants are PAYE workers who have also endured all the additional taxes and charges imposed over four years of troika-driven austerity budgets.

The so-call ‘public-private pay gap’

The Independent report says that the Commission report “highlights the significant and unexplained wage gap between private and public sector workers.” This is an extraordinary statement given that there has been so much research on public-private pay comparisons in recent years.

Last October (2012) the Central Statistics Office produced the most comprehensive report on the issue. It acknowledged that economists here and abroad disagree about how to compare pay in the two sectors, but said the ‘gap’ was decreasing regardless of the methodology used.
Its report found that the pre-pension levy pay gap for men ranges between 2% and 14%. The pay gap is wider for women at between 9% and 20%. So, when the pension levy is applied the public service pay ‘premium’ ranges from minus-5% to plus-7% for men, and from 2% to 13% for women. (The larger gap in pay for women raises particular concerns about the prevalence of low paid and often precarious work for women in the private sector.)
These are aggregate figures, which do not attempt to compare the pay of specific jobs with similar skills and education requirements, experience, or levels of responsibility. Far from being “inexplicable” most economists would agree that these are the factors that account for the so-called ‘public-private pay gap’.

The value of the Croke Park agreement
The Croke Park agreement has so far delivered recurring annual savings of €1.5 billion and is on target to deliver net savings of €3.3 billion by 2015. Next week unions and management will enter negotiations aimed at increasing this by a further €1 billion. Unlike other countries in similar budgetary positions, this has been achieved without any industrial action or even the threat of industrial action. The deal has also delivered:
· A staffing reduction of 30,000 (with another 10,000 to come) which is happening to meet targets agreed with the ‘troika’, including the European Commission.
· Pay cuts and pension levies averaging 14% (24% for new entrants and promoted staff) on top of increased taxes and charges imposed over four years of troika-driven austerity budgets
· Further income reductions for many as rosters, overtime and premium pay arrangements have changed
· The redeployment of thousands of staff within and between public service organisations
· Reductions in sick leave
· Longer working hours for some
· Fewer leave days for many
· Changes to allowances.

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On choreography. A prediction. The unions will “withdraw” from the process on Thursday afternoon because the management agenda “would not be acceptable to our members”. There will be a period then when we all hold our breath and speculate as to what might be about to happen. But then journalists will start to talk about “back channels” which remain open between the sides, facilitated by Kieran Mulvey or somesuch. And, hey presto, after the standoff, the parties will reconvene and “hammer out” the agreement which has, as Paddy Healy says above, in all probability been already sketched out and agreed.

It might be that Um viewing this on my phone or it might be because my wits have been dulled by the day that was, but I find the above piece hard to read. It isn’t clear to me exactly who is saying what.

It is a combination of original material at the top of the post and two long quotes which contain lots of formatted material (headers and bulleted points, with two different styles of bullets, and some heeaders in bold and others in italics).

6to5 against asks what they are talking about at the negotiations if the outcome is substantially decided already. Based on my experience as a trade union negotiator, I can assure him that, like politicians, management and union reps have no problem talking around an issue for days. Sometimes this is a legitimate tactic particularly if some external development is expected which may strengthen the negotiating position. Joe is correct to point out that “breakdowns” and the like can also be expected as part of the choreography. Another variant on this is to have no resumption after the breakdown. After this the government implements the measures unilaterally. This ensures that the union leaders cannot be directly blamed. Union leaders then indicate their compliance by ensuring that there is no effective response and re-enter talks on other issues later. This is what happened surrounding the last public service pay cut. We can of course have completely novel elements of choreography!

I’m very much in two minds about the choreography of the 9th of February.

The cynical side I don’t even have to expand upon.

The other side. Hmm. I do believe that the TU leadership has a problem. A problem of its own making for sure, but a problem nonetheless. It has a membership which is under attack, which knows it is under attack both at a workplace level and a political level, and a membership which is angry, with a mixed level of militancy vs acceptance of the grand narrative being pushed by the vested interests opposing it. And it has a membership which has not been educated politically, over years and decades, to put the pieces of the picture together in an alternative narrative. The TU leadership are also closely coupled to the LP, and are infected with the same hand-wringing reluctance to accept the status quo, with limited counter demands. So what do they do?

I was at the inaugural meeting of the SIPTU district committee in Navan last night. Jack O’connor spoke and laid out the reasons for the 9th of Feb protest. But the interesting thing was the randomness of the floor discussion afterwards. Anger. Fear. Confusion. Aimed anywhere and everywhere. It’s fine to say that the leadership should be providing just that, but baby steps. There’s little to be gained by leading a confused and politically undeveloped membership into a big battle which will inevitably be defeated, so in that respect I do credit O’Connor with talking sense. Whether the district committees will be the start of apolitical engagement and education is another matter. There are noises being made that this is the intention. If so, this is something worth engaging with and supporting. If the charade of the 9th of Feb is part of that process of winning a pre-arranged victory on the promissory notes and can act to build some political confidence within the membership then so be it, provided it is the beginning of a process and not just a cynical manoeuvre by the TU leadership to deliver their membership on a plate of minimal demands and then duly forgotten. We’ll see.

With the best will in the world the Country is Bankrupt and we are at present living on the Charity of others. Can we afford to keep borrowing money so that our Garda, Teachers and Medical Staff can aspire to a certain standard of living?. We have lived in a Fool’s Paradise for years where Corrupt Politicians, Property speculators and people who profited from Property Ownership manipulated the system. The Country is now under “Adult Supervision”. We are now paying for the populist policies of Charlie, Bertie and Biffo. The Party is over, we are now suffering from the hangover.

“Can we afford to keep borrowing money so that our Garda, Teachers and Medical Staff can aspire to a certain standard of living?”

That’s one way of putting it. Another way would be to ask whether we can afford police, educational and health systems at all? If you want a functioning civil society, you have to pay for it, it’s as simple as that, and workers have a basic entitlement to be reasonably remunerated for their labour. It’s hardly as if the vast majority of people employed in the sectors you identified are living the high life. Following cuts in recent years, very many public sector employees are suffering considerable hardship and struggling to make ends me.

It’s also an error, I think, just to ask whether we can afford to pay for a public service by simply looking at levels of borrowing alone. Much as right-wing economists like to use the analogy, a state is not a household. There isn’t a fixed level of income into which expenditure must fit. Governments have powers to raise revenue as well as spend money. Look at one of the IMPACT press releases above. It shows that when it comes to high earners, those above €100,000 the vast, vast majority, both in absolute and per capita terms are in the private sector. But we have a government which refuses to increase income tax whatsoever, even at those levels. Of course, if you take low income tax rates as a given, you’re going to end up with a huge deficit. But let’s not pretend that that’s the only choice the government has.

Let us remember that of the 111, 000 income recipients earning over 100,000 only 5,808 are in the public service and a large proportion of these are medical consultants and
 • Top 10,000 tax payers have a total income of €5,959m per year and each has an average income of €595,900 (Reply by Michael Noonan to parliamentary question) and almost all these are in the private sector
• From 2010 to 2012 the wealth of the top 300 Irish rich has increased by 12 Billion Euro to 62 Billion or 200 million each ( Nick Webb, Sunday Independent, March 11 2012)

As Smiffy says the government has choices other than borrowing.
They are prepared to cut entitlements of public servants, they are prepared to cut the income of those on low pay through removing the PrSI disregard on the first 127 Euro of weekly income and to cut child benefit even to those on social welfare. But they are not prepared to tax the incomes and/or assets of the very rich.

“Top 10,000 tax payers have a total income of €5,959m per year and each has an average income of €595,900 (Reply by Michael Noonan to parliamentary question)”

Paddy, can you provide a reference for that please? It’s an astonishing figure and it exposes the FG lie that the gov’t has “reached virtually the end of the income taxation side”, as stated two weeks ago by Minister of State at the Department of Finance Brian Hayes.

why dont the unions tie the government into some positive items for staff when the economy comes back so PS will benefit. Make some of the changes temporary until finances improve. Reward high performers. There should be something positive for staff in croke park 2. Instead of paying the premium rates or allowances give additional time for their pension at least they would be getting something in the future.

Remember that in the original Croke Park deal there was a provision that a portion of savings would be used to restore the previous pay cuts. This has now been “forgotten” by both sides!
The reason that cuts will not be temporary even if both sides say so is that there is an underlying agreed agenda of “internal devaluation”. Under a traditional devaluation in the era of separate currencies all financial assets held in the currency as well as pay were devalued and imports became dearer for all cosumers and businesses. Under an “internal devaluation” in the era of common currency only pay, pensions and welfare benefits are devalued leaving those with net financial assets untouched or indeed effectively enriched. Public service pay reductions are part of a programme of reducing pay throughout the entire economy. This is the real reason why business leaders and their supporters in the media are conducting a virulent campaign for cuts in public service pay and pensions.

“There is therefore no option: we have to try to simulate a devaluation, by cutting wages right across the economy.

The argument that this would lead to economy-wide deflation is specious, since the economy-wide price level that is relevant for us is the European price level, which is unaffected by anything that may or may not happen in this tiny island of ours.

And the cross-country evidence from the Great Depression is unambiguous: the more wages fell during the 1930s, the less output declined.

Our wages are too high relative to our productivity levels, and relative to wages abroad.

They will fall eventually. The only question is whether they do so quickly, or are ground down over the course of a decade or so by lengthening dole queues and a collapsing economy.”
Kevin O’Rourkehttp://www.independent.ie/business/irish/currency-devaluation-may-look-an-easy-option-but-its-a-trick-on-workers-1653712.html
This is a good description of the EU/IMF/Labour/F.G economic policy. So far it hasn’t worked; working class living standards just have not been reduced enough. So more reductions are called for. Plus ‘labour activation’ measures from Joan Burton to drive workers off welfare and into a labour market where unemployment is at depression levels.
The situation is grim. The ‘malefactors of great wealth’, and their assorted propagandists, just departed from Davos confident that the crisis has abated. Worldwide the reserve army of the unemployed is over 200 million. The crisis has weakened the working class and strengthened capital. And in Ireland the very small left opposition is fracturing into even smaller factions….

The Teachers’ Union of Ireland (TUI) will consider its continued participation in public service talks if the Government tables proposals that will result in pay cuts or job losses.
Speaking today, TUI General Secretary John MacGabhann said: “In December, the TUI Executive decided, on a without prejudice basis, to accept the Government’s invitation to talks. This was with a view to examining any proposals that might be put forward by the Government side and to putting our own priorities to Government. TUI priorities are to preserve the pay and pensions of members, ensure protection against compulsory redundancies, tackle the casualisation of the teaching and lecturing professions and improve the pay scales of newly qualified teachers.
“At a meeting of the TUI Executive Committee last Friday, a motion was passed that as soon as concrete proposals are put on the table, the TUI Executive will meet without delay. If at that stage pay cuts or jobs losses are included in the agenda, the TUI Executive Committee will consider the union’s further participation in the talks,” he said.
Mr MacGabhann highlighted the issue of casualisation in the teaching and lecturing professions which he said must be addressed in the current talks. “About 30% of our members are employed on a part-time basis, some earning as little as €10,000 per annum, which is not a living wage. They are living in income poverty with little prospect of full time, permanent employment. We have heard of young teachers and lecturers leaving the profession to take up jobs in the private sector in areas such as retail and in call centres because there is currently little prospect of a career in teaching for them.
“This and other matters such as the deep cuts to staffing and the erosion of service to learners must be addressed by Government in the context of the current talks.
“Extensive additional productivity has been given by teachers and lecturers under the existing Croke Park Agreement. An additional 900,000 hours annually are being provided by second-level teachers and teaching hours delivered by Institute of Technology lecturers have increased by over 10% in circumstances of staffing cuts and increases in student numbers. This increased productivity is in addition to the pension levy and pay cuts which have reduced the take-home pay of serving teachers by as much as 20%,” he said.

“About 30% of our members are employed on a part-time basis, some earning as little as €10,000 per annum, which is not a living wage.”- The logic of capital is to degrade all work including intellectual work. The public sector cannot be allowed to be immune from this power dynamic.

In the case of secondary teachers, many non-permanent teachers have seen their hours cut again and again. In cases I’ve encountered, these classes are then given to longer serving teachers – even where they are unfamiliar with the subject. I bring this up as an example of the kind of stealth wage cuts that affect some lower paid public servants. If unions are serious about taking a zero tolerance approach to wage cuts, then they need to address these as well.

Psychiatric Nurses Association Denounces ICTU Leaders
At the 24/7 Rally, Seamus Murphy, deputy general secretary of the Psychiatric Nurses Association (PNA), said it was “incomprehensible” that other trade unions were “in cahoots” with the Government to break the original Croke Park deal, which secured public sector workers’ pay and allow-ances.
“The current Agreement has 16 months to go” he said. What the hell are they doing in there? Some think that a bad deal is worse than no deal. But they are bloody well wrong”
He accused the Government of reneging on the original pay deal “with the complicity of the Irish Congress of Trade Unions”.
Remember
Recent replies to parliamentary questions by Minister for Finance, Michael Noonan (Dáil Report Oct 3, 2012) confirmed that:
• The top 10,000 income units (individuals or jointly taxed couples) had a total annual income of 5.95 billion and an average annual income of 595,000 Euro each.
• The top 1% ( 21,650 inclusive of top 10,000)had a gross annual income of 8,742m and an average annual income of €403,760 each
Almost none of the top 1% work in the public sector

There is no proposal by government to gather additional revenue from the 10,000 on 595,000 Euro each in the private sector. The removal of 1 billion from this group through taxation would leave them with the equivalent of just under 0.5 million each at current tax rates.
But government is proposing to extract 1 billion from public servants over the next three years.

By the way, doctor: How much fish oil should I be taking.
Researchers have prolonged studied the effects of fish oil
on a variety of populations and several diverse circumstances even so,
they had not attempted to decide how it impacts an infant’s immune process until eventually not long ago.
A recent study by researchers at UCLA’s Jonsson Comprehensive Cancer Center suggests the Huntsman
Cancer Institute is right to focus heavily on diet when it comes to cancer.